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Abstract

We take advantage of an unusual natural experiment-a high-quality 1920s subdivision split neatly in half by a central-city/suburban boundary-to study the response over 30 years to the relative decline in the quality of central-city services since the 1960s. As expected, a large sale price differential opens in the 1960s. Demographic characteristics are nevertheless similar across the boundary. Survey data indicate Tiebout sorting: the central city side attracts households who prefer alternatives to suburban public schools. Children attend parochial and public "magnet" schools. A neighborhood association supplements municipal services. Rigid service district boundaries inhibit closure of the house-price differential. Copyright Blackwell Publishing, Inc. 2007

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